Clearance rates hit six-year low as more than half of Australian homes up for auction fail to sell

Lead

Australia's property market has hit a notable milestone, with auction clearance rates across the country falling to their lowest levels in six years. Data from property information company Cotality shows less than half of all homes that went to auction were sold in the latest reporting week, a figure that has not been seen since the early days of the COVID-19 pandemic.

Coverage Comparison

Reports from ABC Australia and The Guardian — World both highlight the sharp downturn in clearance rates, though they present slightly different figures. ABC Australia, citing Cotality data, reports that the preliminary national auction clearance rate picked up slightly to 49.8 per cent from last week's 49.2 per cent, which it says was already the lowest recorded since 2020. However, another ABC report pegs the weighted average for the week at 47 per cent, with clearances dropping below the 50 per cent mark for the first time since April 2020.

The Guardian — World also cites Cotality and reports a national clearance rate of 47.4 per cent, noting that this is the weakest result in six years. The variation in these figures reflects differences in the data cut-off points and preliminary versus final calculations, as well as the timing of the reporting.

Key Claims

Across the capital cities, clearance rates varied widely. The Guardian reports Sydney's clearance rate at 47.4 per cent, with 166 auctions withdrawn and only 225 of 645 auctions cleared, according to ABC Australia. Melbourne fared better, with The Guardian reporting a 50.6 per cent clearance rate, while ABC Australia reports 54.5 per cent. Brisbane's figures are more divergent: The Guardian reports just 33.3 per cent of homes sold, while ABC Australia reports an even lower 23.8 per cent, a rapid fall from 39.3 per cent the previous week. Other capitals reported by The Guardian include Perth and Adelaide at 40 per cent and Canberra at 47.1 per cent. ABC Australia, in a separate report, gives Canberra at 50 per cent and Adelaide at 45.7 per cent.

According to Tim Lawless, Cotality's Asia-Pacific executive research director, the persistent low clearance rates indicate a fundamental mismatch in the market. "Clearance rates persistently holding this low shows a mismatch between buyer and seller expectations," he said. He also noted that the numbers could decline further once finalised, potentially reaching the low-to-mid 40 per cent range.

The Reserve Bank of Australia kept interest rates on hold at 4.35 per cent last week, after three consecutive rate increases earlier this year. The decision came as data showed the economy losing momentum and unemployment rising, as reported by ABC Australia and The Guardian.

June saw the biggest monthly fall in national housing values since 2022, according to Cotality figures reported by ABC Australia. This follows the federal budget announcement limiting negative gearing to new builds, part of a broader government overhaul of the capital gains tax discount and negative gearing that is set to be debated in parliament this week.

Mr Lawless attributed the softer market to multiple factors, including "foundational challenges around affordability and serviceability, interest rate hikes, some pullback from investors post-budget." He also noted that an increasing number of property listings has played a role in weakening the market, and that sellers need to be "quite realistic" about current conditions.

The cost of living, particularly in Sydney, is a major issue in the upcoming NSW election, as noted by ABC Australia.

Perspectives

Annabelle Mezieres, an economist at Cotality, expressed expectations of further easing in auction activity. "Auction volumes look set to ease further over the coming weeks, partly a seasonal trend but also likely in response to weaker selling conditions," she wrote, noting that nearly 24 per cent of scheduled auctions were withdrawn and nearly half, 48 per cent, sold before going under the hammer.

Jane Hume, the deputy Liberal leader, criticised the Labor government's plans to roll back negative gearing and limit the capital gains tax discount, calling them "entirely unfair".